Controllership · Month Close · Audit Readiness

Provisions and Contingent Liabilities: AS 29 Year-End File

Finin2min Controllership Desk·June 2026·9 min readPROVISIONSValidated: 17 June 2026

Year-end provisions are judgement-heavy. Finance should not wait for auditors to ask whether a claim is probable, possible or remote.

Detailed analysis

Why this matters
AS 29 deals with provisions, contingent liabilities and contingent assets. The close file should capture obligation, probability, estimate, legal correspondence, board/management assessment and disclosure rationale.

Practical example

Example
A customer claim of ₹40 lakh is pending. Legal says settlement is possible but amount uncertain. Finance prepares case summary, legal opinion, probability assessment, provision/disclosure decision and board/audit committee note.

Evidence and control checklist

Area	What to check	Evidence to save
Obligation identification	Legal, tax, warranty, onerous contract and restructuring items.	Claims register and department confirmations.
Probability assessment	Probable, possible or remote classification.	Legal/management memo.
Measurement	Best estimate and range of exposure.	Computation and support.
Disclosure	Provision vs contingent liability note.	Financial statement disclosure draft.
Review and update	Movement from opening to closing balance.	Provision roll-forward and approval.

Common mistakes

Avoid these mistakes

Booking provisions as plug numbers.
No legal confirmation.
Not updating old contingent liabilities.
Ignoring warranties/onerous contracts.
No disclosure rationale.

Validated source note

Validated on 17 June 2026
Based only on official India Code, MCA and ICAI source pages listed below. Check the latest Companies Act, Schedule III, accounting standards, Ind AS/AS applicability and auditor guidance before closing or filing.

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Official sources used

This article is intentionally source-limited to official India Code, MCA and ICAI material. Source validation date: 17 June 2026. Verify final positions with latest Companies Act, Schedule III, accounting standards, Ind AS/AS applicability and auditor guidance before closing or filing.

FAQs

What is a provision? ▾

A liability of uncertain timing or amount recognised when criteria are met under applicable standard.

What is contingent liability? ▾

A possible obligation or present obligation not recognised due to uncertainty/criteria.

Why legal input matters? ▾

Claims need probability and exposure assessment.

Should old cases be reviewed annually? ▾

Yes. Circumstances and probability may change.

What evidence is needed? ▾

Claims register, legal opinion, computation and disclosure note.